Mlm. Multi level marketing. If I have a sales rep who brings in and manages people under her (friends selling product) I want her to make her direct sales commission plus a portion of the income of those under her goes to her for managing them.

Kind of how a general contractor gets a % of the subs.

Question is how many layers deep in managers can I have before it becomes a legal or admin nightmare. Is there a limit at which I need to register as an mlm/network marketer?